This paper examines the relationship between environmental uncertainty and tax avoidance at the firm level. We posit that managers faced with more uncertain environments are likely to engage in more tax avoidance activities. We find a significant and negative relationship between environmental uncertainty and effective tax rates, and our results persist through a battery of robust checks. We further find that managerial ability mitigates the above relationship. Moreover, we find that small, highly leveraged, and innovative firms operating in uncertain environments engage in more tax avoidance.
Huang, H., Sun, L. and Zhang, J. (2017), "Environmental Uncertainty and Tax Avoidance", Advances in Taxation (Advances in Taxation, Vol. 24), Emerald Publishing Limited, pp. 83-124. https://doi.org/10.1108/S1058-749720170000024002Download as .RIS
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